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Hastie fear over post-dated cheques

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ELIZABETH JACKSON: In the United Arab Emirates, the last remaining managers of the Hastie construction group are bracing for the consequences of bouncing cheques that were written before the company's disastrous collapse last month.

The penalty for a bouncing cheque in the UAE is as much as three years for each dud cheque.

Hastie managers are worried that a number of post-dated cheques are about to be presented to banks and have appealed to the company's administrators to top up the company's now empty coffers.

Business editor, Peter Ryan, has been following developments.

PETER RYAN: In the United Arab Emirates a bounced cheque is more than just bad form, it could mean serious prison time and Hastie's four remaining executives on the spot are waiting for a not so friendly phone call. They know a number of post-dated cheques, written before the group's collapse, are about to be presented.

General manager, Trevor Arkle, says foreigners get no special treatment, whether there's an intention to commit fraud or not.

TREVOR ARKLE: The situation is in the UAE at the moment since the collapse in 2008 very strict laws applied to post-dated cheques. The current post-dated cheque fine is three years in jail for each post-dated cheque.

PETER RYAN: So that could be a lot of jail time for people who've been writing post-dated cheques.

TREVOR ARKLE: Correct. There is a lot of people in jail at the moment on post-dated cheque charges. There is actually a hunger strike going on in the UAE at the moment trying to fight this within the jails, with expats; it's a serious, serious position to be in.

PETER RYAN: Fears about bouncing cheques further complicate efforts by local Hastie executives to secure termination benefits for almost 1,000 foreign labourers, who feel they've been abandoned by administrators back in Australia.

But Hastie commercial manager, Neil Hislop, says dishonoured cheques are not just a legal problem for the company but a chain of sub-contractors and suppliers.

NEIL HISLOP: These guys are in a similar position to us. If they can't pay these debts, they're going to end up in the debtor's court as well. And all they were looking for was a bit of hope that the administrator was here and he was doing something to recover something for all of them.

PETER RYAN: Hastie's joint administrator, Craig Crosbie, confirmed that dud cheques had been issued, but he was unable to provide a solution.

CRAIG CROSBIE: There were cheques that I do believe have been issued and there are no funds once again in the bank accounts to honour them.

It's a very difficult situation. Obviously the laws in that part of the world are much harsher than if they were in Australia for example.

PETER RYAN: Hastie's bank accounts were emptied a few days before the company failed last month, with $3 million transferred from Dubai to Sydney. That meant local staff couldn't be paid out.

But Neil Hislop is frustrated with Hastie's administrators, who he claims are blocking a solution that could unleash a pipeline of cash.

NEIL HISLOP: There is a lot of money here that could be collected. There's also probably $200 million worth of bonds in the market. Some of those bonds could be saved; you would think that would be a concern for the banks.

PETER RYAN: And there could be more bad news to come. Hastie general manager, Trevor Arkle, says it's not just about cheques in the mail but that in the eyes of local powers, Australia's international reputation is in tatters.

TREVOR ARKLE: Well I personally feel that there will be ramifications from the government against any further Australian businesses trying to set up or carry on with the banks; the banks are going to take a very dim view of this.

PETER RYAN: So it's fair to say Australia's a bit on the nose at the moment.